These Unstoppable Dividend Stocks Treat Their Investors Like Royalty

Many companies have either had to stop increasing their dividends or, worse yet, cut or suspend their payouts because of financial troubles over the years. That makes those with unbroken streaks of growing their payouts all the more impressive. A tiny percentage of public companies have multidecade streaks of increasing their dividends.

A little more than 50 companies have delivered 50 or more years of dividend growth. Dubbed Dividend Kings, these companies have delivered durable dividend growth through wars, recessions, pandemics, and other major events. Here's a look at a trio of companies that have treated their investors like royalty over the years.

Accepting its crown

ADP (NASDAQ: ADP) recently declared its latest dividend payment. The payroll and HR services provider increased its payout by 10%, raising the quarterly rate to $1.54 per share, or $6.16 annually.

That was a milestone dividend increase for ADP. CEO Marcia Black commented on the payout in a press release: "It's an exciting time as we mark our 50th consecutive year of dividend increases and celebrate 75 years of being at the forefront of workforce innovation. We are proud to be included among the elite group of 'Dividend Kings', who have a history of increasing dividends for at least 50 consecutive years, and we remain focused on continuing to deliver strong results for our shareholders."

Several factors have contributed to ADP's unstoppable dividend. The company provides vital services to customers, enabling it to generate steady and growing revenue. It also invests in innovation to stay ahead of the competition. In addition, ADP maintains an extremely strong financial profile, putting it in an excellent position to weather economic storms.

A crowning achievement

Consolidated Edison (NYSE: ED) joined the elite group of Dividend Kings earlier this year. The utility increased its dividend payment by 2.5% in January to $0.83 per share each quarter and $3.24 on an annual basis.

CFO Robert Hoglund commented on that feat in a press release: "The 50th consecutive annual increase for stockholders, the longest period of consecutive annual dividend increases of any utility in the S&P 500 index, reflects our continued emphasis on providing a return to our investors while meeting the needs of our customers during the clean energy transition."

Utilities tend to have long records of growing their dividend. While Consolidated has the longest dividend growth streak of a utility in the S&P 500, a few smaller peers have delivered even longer dividend growth streaks. Utilities can deliver steady dividend growth because they generate stable cash flow backed by government-regulated rate structures and benefit from continued demand for electricity and gas. Meanwhile, Consolidated Edison has a conservative financial profile, including targeting a reasonable dividend payout ratio of 55% to 65% of its steady earnings. That enables it to retain cash to invest in expanding its operations, like clean energy infrastructure.

Extending its streak

Federated Realty Investment Trust (NYSE: FRT) increased its quarterly dividend to $1.10 per share in August. That extended its dividend growth streak to 57 straight years. It's the longest record of consecutive annual dividend increases in the real estate investment trust (REIT) sector.

Since REITs have to pay dividends to remain in compliance with IRS regulations, many have long streaks of increasing their dividends. Federal Realty's is the longest because of its longevity and conservative approach.

The company has a very narrow investment focus. It owns high-quality retail centers strategically located in the first-ring suburbs of nine top metro markets. Those metro areas are more affluent and have limited space for new competition, and Federal Realty's retail centers tend to benefit from strong and growing demand from retailers that want access to these consumers. Federal Realty is also a selective investor with a strong financial profile. These factors have enabled the REIT to steadily grow its cash flow and dividend over the decades.

Durable dividend growers

ADP, Consolidated Edison, and Federal Realty Investment Trust are some of the most durable dividend stocks in the world. Their resilient business models and financial strength have enabled them to deliver 50 or more years of annual dividend growth. They are likely to continue to build on that foundation in the future, making them ideal stocks for those seeking sustainable and growing dividends.

Should you invest $1,000 in Federal Realty Investment Trust right now?

Before you buy stock in Federal Realty Investment Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Federal Realty Investment Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $890,169!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of November 11, 2024

Matt DiLallo has positions in Automatic Data Processing. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.